August 28, 1998

To:Works and Utilities Committee

From:Angelos Bacopoulos

General Manager - Solid Waste Management Services

Subject:Planning for Long-term Solid Waste Disposal Capacity

Purpose:

The purpose of this report is two-fold. It describes the current environmental assessment ("EA") level planning for long-term disposal capacity, including the EA timeframe, and describes the timeframe and components of a "direct" contracting out process through a Request for Proposals ("RFP"), without review and approval by the EA Branch or Ministry of the Environment. The potential impacts of the two courses of action are described in the body of this report.

Secondly, the report presents a series of policy issues, including the EA-level planning approach, which need to be addressed before we can advance our current EA-level planning or proceed directly to an RFP. We are seeking direction from members of Committee and Council regarding these policy issues.

Recommendation:

That this report be received for information.

Funding Sources, Financial Implications and Impact Statement:

In the body of this report a description of funding requirements for project consultants and external legal assistance is described. The amount of the additional funding requirements is linked to the form of planning which the City pursues regarding long-term solid waste disposal.

Council Reference/Background/History:

On July 15, 1998, Works and Utilities Committee had before it a report from A. Bacopoulos, General Manager, Solid Waste Management Services (dated July 9, 1998), that described three options regarding the service life of the Keele Valley Landfill Site ("Keele Valley") and the impacts of each option. Contained within that report was a description of the EA planning process for long-term solid waste disposal capacity and a list of six policy issues. The report stated that Council direction was needed regarding the six issues in order for the EA Terms of Reference to be finalized and submitted to Council for adoption, followed by submission to the Minister of the Environment for approval.

After consideration of the report, the Commissioner of Works and Emergency Services was requested to submit a further report regarding Keele Valley's service life options, and a second report containing additional information related to the six policy issues. This report provides the additional information regarding the six policy issues as requested by Works and Utilities Committee.

Discussion and Justification:

Current EA Planning Process for Long-term Solid Waste Disposal Capacity

Works and Emergency Services is currently preparing a draft EA Terms of Reference for post-Keele Valley disposal capacity. EA-level planning for long-term disposal capacity was initiated by the former Metro Toronto Council. The preparation of a Terms of Reference is a mandatory planning step when undertaking an EA under the current legislation.

The former Metro Council initiated EA-level planning in response to an amendment to Bill 76, the Environmental Assessment and Consultation Improvement Act, 1997. The amendment provides that prescribed municipalities (by regulation) cannot proceed with an undertaking to dispose of waste where the facility and services of another person are used, by contract or other arrangement, without EA approval.

Our current planning process, done in accordance with the Environmental Assessment Act, engages the marketplace to identify new long-term disposal capacity (i.e. a process of "contracting out"). While Toronto has not been prescribed to date, the City could be prescribed at anytime in the process. We have proceeded to date as if prescribed under the Act as a hedge against the possibility of being prescribed in the latter part of a non-EA RFQ/RFP.

A comprehensive report regarding the EA planning process, dated January 29, 1998, was submitted to the February 1998 meeting of the Works and Utilities Committee. Two subsequent briefing sessions have been held for members of the Works and Utilities Committee.

The current planning process is designed to have new disposal capacity available by mid-2002. However, this does not provide for a hearing (if required), or significant delays in the multiple planning steps, which may include site preparation (approvals and capital works).

A chart showing planning steps and timeframes is attached as Appendix A.

Engagement of the Marketplace without EA Approval

On August 18, 1998, members of the Solid Waste Management Industry Consultation Committee (SWMICC) discussed with the Chair of Works and Utilities Committee, Councillor Betty Disero, the engagement of the marketplace through an RFP process to secure long-term solid waste disposal capacity. It was proposed that the City embark on an RFP without proceeding with EA approval.

The advantage of moving directly to an RFP process is a time savings of at least a year and perhaps two years, to bring new disposal capacity on line, as compared with the timeframe under the EA-level planning route.

The major disadvantages are the potential for prescription under the EA Act at anytime in the planning process and potential criticism for avoiding environmental responsibilities in waste management planning.

However, in respect of the latter disadvantage, this could be mitigated by the maintenance of sound environmental planning irrespective of EA and MOE review, in the event that Council provides direction to directly engage the marketplace through an RFP. We would recommend that the major elements of the current planning process be maintained, including:

-description of our planning approach in a planning document format;

-ongoing public and industry consultation;

-refinement of the evaluation criteria at both the Request for Qualifications (RFQ) and RFP stages;

-maintain a multi-faceted evaluation process, which includes: (1) the macro-environmental impacts of proposals (greenhouse gas production, smog precursors, energy consumption, etc.); (2) the Ontario-based benefits that would be derived (job creation and purchase of goods and services); and the financial implications to Toronto;

-integration of our disposal needs with our 3Rs planning; and

-continued collaborative planning with other Greater Toronto Area Regions.

Listed as Appendix B is a chart that identifies the key planning steps and timeframe for an RFQ/RFP process, which proceeds without EA approval.

Policy Issues

In order for the current EA Terms of Reference to be finalized or a direct RFQ/RFP process to be engaged in, Council direction is needed on the following policy issues.

1.Is the marketplace approach (which may result in public-private and/or public-public partnerships) a suitable approach to identify and attain new disposal capacity?

The former Metro Toronto Council initiated a marketplace approach for the contracting out of solid waste disposal following a series of public sector site searches - municipal and provincial - which were not successful. The current EA-level planning process provides for the opportunity to engage in public-private and/or public-public partnerships, in addition to a straight fee per tonne of solid waste disposed. The advantage of this approach is that we gain a broad range of opportunities and engage the expertise and diversity of the marketplace.

For example, by allowing for potential Toronto participation we may gain access to opportunities that would not otherwise qualify for the RFP process because of lack of waste management expertise or other reasons.

We recommend that a marketplace approach be maintained as a means of securing long-term solid waste disposal capacity and that the opportunity for a public and/or private sector proponent to enter into a partnership with Toronto be maintained.

2.Is the inclusion of potential export to the United States an appropriate alternative?

Export of solid waste to the United States is a viable and potentially cost-effective alternative that the marketplace can offer. Toronto is currently exporting solid waste to the Arbor Hills Landfill in Michigan, under contract with Browning-Ferris Industries ("BFI"). Issues such as border closure and liability were factors considered by the former Metro Toronto Council when it entered into a contract with BFI, and would have to be considered by Toronto City Council if a U.S.-based option(s) reached a short-listed stage. Our Legal Department, with the assistance of external legal expertise, would provide up-to-date information and a legal opinion at the point of Council consideration of a contract with a U.S.-based supplier, should this arise.

In order to draw on a broad competitive marketplace we recommend the continued inclusion of U.S.-based options in an RFP call.

3.Should Energy from Waste technology (incineration with heat recovery) be included in the RFQ and RFP, in addition to landfill technology?

The former Metro Toronto Council proved direction to the Commissioner of Works to facilitate the inclusion of the Energy from Waste ("EFW") component of the solid waste management industry. To date we have received input and interest in the project by a number of EFW-based firms. Their input has been co-ordinated by former Metro Toronto Councillor Richard Gilbert.

The EFW industry has expressed difficulty in meeting a 2002 timeframe for the provision of new EFW-based disposal capacity in Ontario. We have proposed a formula that would require an EFW proponent - or a "greenfield" landfill proponent - to provide 5-years of guaranteed disposal capacity while they proceeded through approvals and construction of a facility in Ontario.

EFW technology is a licensable disposal technology in Ontario. If EFW technology is not included in an RFP process then a major sector of the marketplace is being precluded from participation and the options it may bring to the table.

We recommend that opportunity be provided for the EFW-based industry to participate in any RFP.

4.Does Council endorse the target of 50 percent 3Rs diversion by 2006?

The former Metro Toronto Council established in 1996 a 3Rs diversion rate of at least 50 percent by the year 2006, following consideration of options presented in a comprehensive report prepared by Resource Integration Systems Ltd. ("RIS"). Accordingly, we have been planning to provide long-term solid waste disposal capacity to manage the remaining "residual" waste, after 3Rs efforts have been applied. We have also planned to seek proposals for a range in tonnages and include contractual flexibility in order to adjust the quantity needing disposal as a result of 3Rs-based diversion beyond 50 percent. Of course, such flexibility may affect the price.

In order to provide a framework for the identification of the quantity of solid waste needing disposal, we recommend that Council endorse a 3Rs diversion target of at least 50 percent by the year 2006.

5.Is the continuation of EA-level planning agreeable?

The former Metro Council agreed to undertake a voluntary EA-level planning process for long-term solid waste disposal, following discussions with the Province in regard to a possible contract for export of solid waste. As noted earlier in this report, a shift to a direct engagement of the marketplace without EA approval could lead to the prescription of Toronto under the EA Act at anytime in the planning process.

It should also be noted that even a non-EA planning approach might lead to EA requirements if Toronto selects a public-public or public-private partnership. If an undertaking becomes a "public" undertaking, because of Toronto's participation, it may trigger a requirement for approval under the EA Act without prescription. This could be addressed through an exemption granted by the Province or reliance on the partner's role in securing all necessary approvals, including potential EA Act approvals. However, this latter course of action is not likely to be realized without costs, as a "Toronto role" in any partnership would likely require participation in public consultation and a role in technical studies.

Initially, the EA-level planning process Toronto was to enter into was described by Provincial officials as focussing on the impacts of transporting waste to a third-party EA approved site and an assessment of the impacts of alternative solutions on the broad environment. It was emphasized that no duplication of planning processes would take place.

However, since 1996 we have been presented with suggestions from the Ministry of the Environment's EA Branch officials and other government reviewers for greater in-depth consideration of environmental issues local to proposed sites (such as impact on agricultural land) and engagement of stakeholders local to proposed sites in the planning process.

To date we have been working to strike a balance between the EA-level planning approach initially described by Provincial officials in 1996 and the subsequent government reviewers. This process has required extensive time and resource commitments. We are bringing this matter to the attention of Council members to advise on the delays we have experienced to date, and to advise that we may have some areas of difference with Provincial reviewers that are not resolved at the point when we submit for approval a draft EA Terms of Reference to Committee and Council, prior to submission to the Minister.

If Council directs staff to proceed with EA-level planning we would recommend that our main project consultant, Proctor & Redfern Ltd., be awarded a budget extension of $40,000.00, to facilitate the planning process through to the completion of a draft EA Terms of Reference, and that a budget extension of $20,000.00 be awarded to our external legal consultant, Tory Tory Deslauriers Binnington, for their continued participation in the project. Funds have previously been approved in the 1998 Capital Budget. The draft EA Terms of Reference would be scheduled to be presented to Committee in November 1998.

If Council directs staff to proceed with a direct engagement of the marketplace through an RFP and not proceed with EA-level planning, we would recommend the following steps be taken:

-that the Mayor and the Chair of Works and Utilities Committee meet with the Minister of the Environment to advise on the change in the planning process and seek feedback related to the potential for prescription under the EA Act;

-that staff engage in the process of retaining a consultant and external legal expertise to provide assistance in the design and execution of an RFQ and RFP; and

-that the planning process include, but not be limited to, the components listed above under the heading "Engagement of the Marketplace through RFP".

6.Do we wish to collaborate with potential Greater Toronto Area partners through a dove-tailing of planning processes, in order to combine waste streams and enter into joint disposal agreements?

A very successful planning process among the GTA Public Works Commissioners has taken place during the course of 1998 regarding potential dove-tailing of waste disposal planning processes. A formula for the potential inclusion of other GTA Regions with Toronto has been successfully arrived at with the Ministry's EA Branch. It includes the need for GTA Regions to have in place a public consultation process which identifies the potential to partner with Toronto, a 3Rs plan, the identification of their disposal requirements, and an integrated planning document.

By combining waste streams for two or more GTA regions there is the potential to acquire more competitive disposal rates and engage in more options. We therefore recommend that planning with potential GTA partners continue.

The other issue which staff is seeking direction on regards the service life of Keele Valley. This matter is addressed in an accompanying report also listed on this agenda.

Conclusions:

This report has described the current EA-level planning process for long-term solid waste disposal, and the components of a potential direct engagement of the marketplace through an RFP, without proceeding with formal EA review and approval.

The main concern associated with a direct engagement process is the potential to have the City prescribed under the EA Act by the Province at any time in the planning process.

The two attached appendices provide the timeframes and planning steps associated with EA-level planning and direct marketplace engagement.

We are seeking Committee and Council direction on six key policy issues that have been described in the body of this report. Direction regarding these policy issues is needed whether the City continues with EA-level planning or proceeds to direct engagement of the marketplace without proceeding through formal EA review and approvals.

Contact Name:

Lawson Oates, B.A., M.E.S.

Manager, EA Co-ordination Branch

Technical Services

Works and Emergency Services

Phone: (416) 392-9744

Fax: (416) 392-2974

E-mail: Lawson_Oates@metrodesk.metrotor.on.ca

Angelos Bacopoulos, P.Eng.

General Manager

Solid Waste Management Services

Barry H. Gutteridge

Commissioner

Works & Emergency Services

LJO/ljo:md/disero